The U.S. dollar rose on Wednesday amid expectations that the Federal Reserve will not implement a significant interest rate cut during its upcoming policy meeting.
Weak inflation data from the U.K., which caused a decline in the value of Pound Sterling, along with a sluggish euro ahead of the European Central Bank’s monetary policy meeting, contributed to the dollar’s strength.
Investor sentiment also shifted positively towards the prospect of a second Donald Trump presidency, coupled with hopes that the Federal Reserve will opt for moderate interest rate cuts.
Currently, the markets predict a 95% likelihood of a 25 basis point rate cut from the Federal Reserve next month following an aggressive 50 basis point cut in September.
In economic updates, the Labor Department reported a 0.4% decrease in import prices for September after a revised drop of 0.2% in August, aligning with economists’ forecasts.
Year-over-year, import prices dipped 0.1%, marking the first such decline since February.
The report also indicated that export prices fell by 0.7% in September, following a revised decrease of 0.9% in August. Economists had anticipated a drop of 0.4% in export prices.
The dollar index, which reached 103.61, was last recorded at 103.55, reflecting an increase of 0.28% from the last close.
Against the euro, the dollar strengthened to 1.0861 from 1.0892.
The dollar also appreciated against Pound Sterling, rising to 1.2987 from 1.3074, following U.K. inflation dipping below the 2% target, marking its lowest level in over three years for September, increasing pressure on the Bank of England to consider policy easing at the November meeting.
Against the Japanese yen, the dollar improved to 149.65 yen from 149.22 yen. It also strengthened against the Australian dollar, rising to 0.6665 from the previous close of 0.6704.
The Swiss franc weakened to 0.8655 against the dollar from 0.8621, while the Canadian dollar appreciated against the dollar, rising to C$1.3755.
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